Perspectivas de Inversión 2013 | Repaso Y Previsión Semestral

Executive Summary

In this mid-year review, we will revisit our investment perspectives for 2013 before outlining the asset allocation we recommend for the second half of the year. In January, we expressed the view that the risks within the Euro zone had receded and expected an on-going improvement of conditions in the sovereign debt markets. We also emphasized the key role played by the major central banks and their impact on the behaviour of capital markets has, if anything, become even more overwhelming during the first half of 2013. As anticipated, the threat of inflation has been non-existent and short-term interest rates have remained stable or even been driven lower by central banks, concerned about a slowdown of growth and currency appreciation.


As forecasted, global economic growth has been lacklustre and the perspectives for the major economies are quite divergent. The U.S. economy has coped well with the automatic budget cuts and appears to be in a good position to experience an acceleration of the pace of growth. The Euro zone economy contracted during the first quarter but the prospects for a pick-up of activity are slightly more encouraging. Emerging countries have continued to prioritise a more balanced path of growth instead of growth at any cost; this has translated into below-par growth figures, in particular for China and Brazil.


We recommended a more dynamic positioning of the portfolios at the beginning of the year due to receding tail risks and, to a certain extent, to the lack of fixed-income assets with reasonable yields. This lead us to increase our allocation to equities and convertible bonds, reduce the exposure to investment-grade credit and maintain our positions into high-yield and emerging market debt. We also excluded any investments into highly-rated government bonds. Our assessment that the lower valuations of European and emerging market equities should help them to outperform US ones has proved to be off the mark. However, we had refrained from over- weighting positions in emerging market equities, which has turned out to be a positive decision.


When looking at the prevailing market conditions since the beginning of the year, the asset allocation of our portfolios appears to have been quite well-suited. We must however express agenuine dissatisfaction with the year-to-date performances of our portfolios. Generally speaking, the returns produced by the managers of our selected funds have been very satisfactory and the impact of currency variations has been limited. What really hurt portfolio performance was our exposure to gold mining equities, to commodities including physical gold and, to a lesser extent, our equity and debt positions in emerging countries. Our exposure to commodities has since been cut and profits been taken on certain equity positions, leaving our portfolios with above-average levels of cash. This positioning has contributed to limit the impact of the June correction and will enable us to redeploy this cash in an optimal way during the months ahead. Finally, we must also point out that the performance of the widely referred to MSCI World Equity Index is influenced by the heavy weightings of a limited number of equity markets and does not reflect the very diverging performances observed in equity markets across the world this year.


In the next section of the document, we will review the factors that have had the biggest impact on financial markets so far this year and also highlight some of the key economic indicators that we observe to evaluate economic conditions. Following a brief overview of the year-to-date trends of the different asset classes, we will outline our outlook and the asset allocation we recommend for the quarters ahead

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